Investing business funds on the stock market

[Money]

I’ve always had a certain amount of liquidity in the bank, and originally I had planned to keep this as reserves for a rainy day.However, my growing interest in stocks and shares, and then my business bank calling to suggest increasing my bank account interest rate - which never happened - pushed me into thinking [...]

More: Investing business funds on the stock market

[Brian Turner]

Heh, well the US financials got absolutely hammered on the stock market today. UK banks will probably take a hit tomorrow, too.

However, I'm playing a long-term game here, and short-term volatility has to be expected.

Even still, my US stocks are still in profit, and if anyone else is looking to buy shares, I'd expect the NYSE to turn more bullish tomorrow regardless - so the financials should be ripe for the picking for new investors if you can get in fast enough.

[frauke]

I would never dream of investing spare business cash in any stockmarket...

Not unless I was prepared to lose it!

I spent a couple of years as a day trader, and tried to work part-time. But it took sooooooo much time, doing huge amounts of reasearch, and ensure that stops & limits were maintained etc. etc.... Although generally I did OK, in the end it was not profitable enough to justify the time spent and yes it was great fun.

But I had a couple of occassions when I had to meet a client and the meetings ran later than expected - only to find a position had gone the wrong way, the stop loss had not kicked in.... and it was too late for me to reduce the loss as I was not there.

As one of my clients have told me when I asked what additional investments was he doing? He could make more money "freelancing" in the time he would need to spend investing his spare cash - and at least by leaving it on deposit (even at a low interest rate) he knew that there was no risk that was going to lose it all. He came to this conclusion after paying a "professional" to invest £250K only to receive less than £150k back over 10 year later!

[Brian Turner]

Indeed, risk forms a big part of it, but much as day trading looks attractive - heck, addictive - I have to take a longer term view and just leave as is.

I also have to accept that the money can be lost - but to be honest, I think that's like saying that whenever you run your own business you have to be prepared to lose your house because of things go wrong.

That's where I think risk management on strengths is really important.

I think we are either at the bottom of a downtrend, or else only a couple of months away from one. If I'm looking to invest my money for a couple of years, I should be fine.

The biggest problem I have, actually, is in the fees I'm stuck with under the broker, plus the fact I act act fast enough - would definitely recommend something like TD Waterhouse or similar in future so that you have instant control of everything as you want.

And incurring losses via a "professional" - indeed, that's why I need to have as much control over what I'm investing in as possible. Only 3 in 10 fund managers beat the market trend, and a study even showed a chimp choosing stocks randomly could outperform fund managers!

The trouble with fund managers is the micromanagement I think lose sight of a macroscopic view of what's happening, plus too many traders keep running with the herd even though it's obvious they are almost upon a precipice, in order to squeeze the last available cent out of their trade.

I think I'm playing safe and intelligently, but time will tell.

[Brian Turner]

Another tip - if you feel you have a workable strategy, stick to it - don't improvise on the fly or allow other people - educated and uneducated - to talk you away from your plan.

My stockbroker suggested further falls were to come, but I thought he was looking at a macroscopic picture and I was focused on a very microscopic view of a very specific area - I was convinced I saw the trough coming and so far I was absolutely right. But because of his comments, I held back to be safe, and missed out on 20% instant growth.

My girlfriend also freaked when I told her how much I'd put on the stock market. She just saw risk. I see manageable risk. Anyway, I thought I'd slightly modify my portfolio to remove at least one high risk stock I believe in, in order to help settle things.
And, yep, guess which stock is now a runaway success doubling in just under a week?

Also - never let anyone else formulate your investment strategy - if you are investing you need to have an idea of what you're doing, and why you're doing it. You need to understand the risks you are taking.

People say you must be prepared to lose your investment, but I think that's bollocks. I placed half of my investments in "safe" areas such as UK banks, and the other half in higher risk but potentially better reward US financial companies - I figured we'd reached the worst of the credit crunch and recovery was now in slow play. My worst case scenario would be to get all my money back. Unless someone were to argue that all of the UK's massive banks would forget how to make profit and go bust, there was no way I could lose my cash. But I had to make sure it was cash I could afford to not touch for a while.

My biggest risk is actually the amount I put in investments - I basically used all of the spare cash, with only enough left in the bank to tide over a month, on the grounds that I had guaranteed income coming in after that time and that the income would be in excess of my costs. A safer strategy would have been to use a lesser amount - say, half the liquid reserves - but I saw a rare opportunity, and as I believe in it, I wanted to put my money in what I believed in. I would never like to say later that I was too scared of my own belief to invest in it, and years later, rue such a decision.

People who lose money on the stock market I think do so especially when they don't understand why. If someone gives you a tip, it's no more worth than a horse racing tip from the bookies. I don't bet on horses - that's a game of chance, and I don't gamble, But I do take calculated risks, as with everything I've ever done in business.

You do not grow without taking on risk, and then you manage risk to downsize their potential impact.

2c just before the New York stock exchange opens - expecting a reasonable good day on the US financials today.

[Emma Reyes]

[quote=Money;115371]I’ve always had a certain amount of liquidity in the bank, and originally I had planned to keep this as reserves for a rainy day.However, my growing interest in stocks and shares, and then my business bank calling to suggest increasing my bank account interest rate - which never happened - pushed me into thinking [...]



Hi! Investing money into funds you risk the whole amount of the money invested. The same concerns investing into business. You may lose 100% of your capital. If I were you I would invest into capital management. Of course, sooner or later you will have to have your feet wet but if it's your first time investing then it's better to refer to the experts, so that you don't get burnt.

[Brian Turner]

Originally Posted by Emma Reyes

Hi! Investing money into funds you risk the whole amount of the money invested. The same concerns investing into business. You may lose 100% of your capital. If I were you I would invest into capital management. Of course, sooner or later you will have to have your feet wet but if it's your first time investing then it's better to refer to the experts, so that you don't get burnt.

That's the difference - I invested in an industry I'd been reporting the news on closely for the past 4 years. I felt I had a good handle on exactly what was happening.

I still think I do - I think the big problem is that people only ever feel comfortable with risk in exact situations.

For example, crossing the road is a risk, running your own business is a risk, investing in the stock market is a risk.

However, if you take considerable time to investigate your market and risks before investing, you're in a better position to manage that risk.

My shares are now up 25% after 6 weeks, and tomorrow I expect the UK banks will rise a good 5%-10%. But if they don't, c'est la vie - I'm in it for the long term!

[frauke]

Originally Posted by Emma Reyes

but if it's your first time investing then it's better to refer to the experts, so that you don't get burnt.

I can provide you lists of people who gave their money to the experts and they lost it too!!!! Theres no guarantee that you will not get burnt using a expert. (Thats why they have to give risk warnings!)

Only you can decide to risk your money or not. And as long as you understand the risk - then you should do what you want - not what a "so called" expert thinks. I'm speak to many of these experts - and are horrified at how little they often know. I'm not an expert, but in many cases I have found my knowledge is greater....... Scary.....

Brian, I glad to see what you are doing works for you. Keep it up

[Brian Turner]

Heh, the one thing I seem to know is how to grow my money on the current stock market - where I'm very weak is how to do this in the most tax efficient manner.

[Emma Reyes]

Originally Posted by Brian Turner

That's the difference - I invested in an industry I'd been reporting the news on closely for the past 4 years. I felt I had a good handle on exactly what was happening.

I still think I do - I think the big problem is that people only ever feel comfortable with risk in exact situations.

For example, crossing the road is a risk, running your own business is a risk, investing in the stock market is a risk.

However, if you take considerable time to investigate your market and risks before investing, you're in a better position to manage that risk.

My shares are now up 25% after 6 weeks, and tomorrow I expect the UK banks will rise a good 5%-10%. But if they don't, c'est la vie - I'm in it for the long term!

Hi! You see I can be only happy for you since you're such a successful investor. But I know quite a lot of people not as lucky as you are. And in this case help is necessary, to my mind. and you're right saying that you need to search the market in a proper way, and not everyone has time for this. But still I think the answer is luck.